Brøvig ASA (`Brøvig`) has entered into a new agreement with Premier Oil, the joint venture partners on the Chestnut
field and Amerada Hess Ltd.
Under the new agreement Brøvig will provide FPSO `Crystal Ocean` during Phase I, extended well test period (EWT), with expected commencement in second quarter 2001 and a duration of about three months. The day rate for
FPSO `Crystal Ocean` under Phase I will be USD 45,000.
Subject to succesful EWT and decision to go forward, the Chestnut partners have options to use FPSO `Crystal Ocean` for Phase II production phase. If the options are exercised, FPSO `Crystal Ocean` may be employed on the
field for a period of 2.5-5 years from mid-2002. The Phase II day rate is USD 55,000. In addition, the Chestnut
partners will pay day rates between USD 10,000 and USD 30,000 for the vessel in the estimated 8-11 months interim
period between Phase I and Phase II.
The new contract is fundamentally different from the previous contract in that it materially reduces Brøvig`s
capital requirements and associated risks. Brøvig will now earn fixed day rates on FPSO `Crystal Ocean`, and may
provide its engineering- and reservoir services on commercial terms during Phase II. Brøvig will consequently
no longer be responsible for the development of the Chestnut field, including funding, and has no further
obligations to invest capital into the Chestnut-field. This responsibility has been taken over by the Chestnut partners. An estimated GBP 6 million already invested by Brøvig in the field may only be recovered under certain circumstances during Phase II. As
consideration for the contract changes, Brøvig has relinguished participation in the net profit from the Chestnut-field.